One who understands how the Watermark Rate works on Pendle will realize that Pendle is more than just a rates-speculation platform

The Watermark is a non-decreasing metric that tracks the value being produced by the underlying yield source In "normal" times, the cumulative payout to the YT matches precisely the Watermark So what about in "troubled" times when the underlying yield source is making a negative yield (or taking a loss)? The the YT side will no longer receive any further payouts, up until the underlying deposit has produced enough yield up to the Watermark level

This effectively makes the PT into a more Senior Tranche relative to the YT, which turns Pendle into a kind of insurance protocol as well It's not insurance in the traditional sense, because being in PT won't save you if the underlying yield source gets completely rekt

But the YTs do act as a buffer to absorb those losses first and the pricing of this "insurance" is done via the market trading of the YT and PT tokens, which we can contrast against traditional insurance models that require a dedicated Underwriter to work

If you're building an insurance protocol, you should check whether your pricing/underwriting mechanisms are competitive against what's being offered by Pendle or better yet, there's probably even more juice here by building your insurance product using some of Pendle's features

and yes, if you're still buying the YT on the wHLP market i'm sorry but you're ngmi